The Science of Flipping - Episode 5 – Rehab Management | Real Estate Investing Podcast

Episode Date: September 20, 2013

document.addEventListener("DOMContentLoaded", function () { podlovePlayer("#player-5eb5ab3269f93", "https://thescienceofflipping.com/wp-json/podlove-web-player/shortcode/post/62", "https://thescienceofflipping.com/wp-json/podlove-web-player/shortcode/config/default/theme/default"); }); document.addEventListener("DOMContentLoaded", function () { podlovePlayer("#player-5eb5ab326a025", {"title":"Real Estate Investing Podcast u2013 Episode 5 | Rehab Management","subtitle":null,"summary":null,"duration":"","poster":null,"chapters":"","transcripts":"","audio":[{"url":"http://thescienceofflipping.com/audio/Podcast-Episode-5-Rehab-Management.mp3","mimeType":"audio/mpeg","title":"AUDIO/MPEG","size":0}]}, "https://thescienceofflipping.com/wp-json/podlove-web-player/shortcode/config/default/theme/default"); }); Today we have a very special guest, my business partner Eddie Rosefield.  He is the man behind the curtain that makes sure everything is running smoothly. He has been developing systems for our fix and flip business from he beginning, none more important than our rehab management.  If your going to be able to scale your business you need to have the right team in place running your systems. Eddie will teach you exactly how to implement those systems.

Welcome to the Science of Flipping Podcast. I'm your host, Justin Colby. Hey guys, welcome to the Science of Flipping Podcast, Episode 5. I am your host, Justin Colby. Welcome, welcome, welcome again to a wonderful podcast here. First and foremost, if you are new to the podcast, I highly encourage you to get to our website, thescienceofflipping.com. The reason you need to get to that website right now, we have the number one most instrumental e-book on the market today. It is the 15 most costly mistakes a real estate investor can make in today's market, guys. We are giving away that information for free.

Again, get to our website. Download our free e-book. The website is thescienceofflipping.com. Our free e-book is the 15 most costly mistakes a real estate investor can make. You need this e-book. It would have changed our business drastically, especially when you're first starting out, as well as knowing what we know now and being long-term investors, experienced investors. This e-book is what you need today. Today, guys, we are going over rehab management.

I have a very, very special guest for you guys today. I'm going to bring on my business partner, Eddie Rosefield. I've mentioned him in numerous podcasts and today he's going to come on to give you golden nuggets in your rehab management. How we structure and the systems that we use in our business for our rehab management. He's going to come on. He is the guy behind the scenes. He is the guy that structures the systems for us to do 96 flips last year, for us to do 50 flips this year, and bring on a 79 unit development project. He is the guy. He is the glue that keeps it all together. He is the guy that creates the systems, guys. You are in luck today.

He will be with you and giving you all his wisdom about the systems for our rehab management. So stay tuned, guys. And for those of you who are new to this podcast, this podcast is about creating the life that you want around your fix and flip rehab business, guys. We all know if you are a fix and flipper, if you have experience, it takes your time and it takes a lot of effort and time to get your business running. And a lot of investors are working too much in their business and not enough on their business. And this podcast, guys, is all about creating your time freedom so that you can run your fix and flip business from a different state, a different country, or even from the comfort of your own couch. That is why we're here today, guys, is so you guys can take your time

back, live the life that you want to live. But we are here to teach you the systems that got us to doing 96 rehab flips last year and being able to go take vacations, go to different states, go to different countries, and all do that. This podcast, guys, will change your life. This will give you the time, freedom, and the systems that you need for your fix and flip business. That is why you're listening to this podcast. Guys, I am your host. I am Justin Colby. As you've heard before, we did 96 deals last year,

but it wasn't all puppy dogs and rainbows. We've had our lumps. We've taken our lumps. Eddie and I have been fighting and digging and scratching. now we are the success that we've been, you know, that we are today. Now, if you take a picture in time, you see us as a very successful company. Well, it wasn't always that way, guys. And we started in 2007 and quite frankly, it took us nine months to do the first deal. That's not a lot of income coming in for two men that have bills. But, you. But we stuck with it and we had the fortitude to stick with it and the promise that we made each other that we're going to keep pushing forward. And today, guys, we've done 50 flips this year. We have brought on a real estate

development project for 79 townhome units. And we've coached hundreds, if not thousands of students over the last several years. And we have a strong desire to continue coaching and to continue teaching. And that's why we put out that podcast for you. And that's why you guys want to continue listening each and every week for the most updated information in the fix and flip world, in the real estate investing world, as well as mindset podcast, guys. So stay tuned. But today, guys, again, I have a very special treat for you. I'm going to bring in here my business partner, my brother. He's going to give you guys so many golden nuggets on how to systemize your fix and flip business. Guys, I'm very excited to bring you my business partner and brother, Eddie Rosefield. Thanks a bunch for the intro, Justin.

Appreciate that. I'm actually really excited. I appreciate you sharing the airtime with me, so to speak. Really want to jump right into it. Honestly, this is actually a subject that I'm very passionate about. I enjoy our fix and flip business, our rehab business, arguably probably the most out of all of them. So as far as managing rehabs, you could definitely call it one of my passions. So when Justin asked if I could kind of step in and do a podcast about managing the workflow of our projects, our business model, but to really help either grow, start, grow, or expand on your fix and flip rehab business. With that said, I will stress that this is a moment in time. Our project manager that we have in place, our property runners, our general contractors,

the systems that we've created to be able to manage rehabs, multiple rehabs in kind of a volume business and a volume market, it did not happen overnight. And when I say it's a moment in time, really what that means is it's constantly growing and changing and adapting. So I want to preface my talk with you to basically just know that we're constantly trying to tweak it and adapt it and make it better. And it may work better in some markets more than others. But with that said, a lot of the core concepts of how we manage our rehabs, you'll be able to apply in most all markets for the most part. And a lot of it, I'm a big systems guy, so I'm really big on seeing something that works and making it leaner and meaner and systemizing it and automating it. Automating, if that's a word.

I just made it a word. Automating things, systemizing things, and delegating really is what it comes down to. So with that said, I'll jump right into our structure. Justin and I, we, to kind of set the tone or set the picture, if you will, we are in Phoenix, Arizona, obviously, and we started out wholesaling, but quickly transitioned into fix and flip. And our business is heavily based on volume now. We are in a lower price point market compared to where we're from in the San Francisco Bay Area, a lot of pockets of California. So we're able to, the private money we've raised, we're able to do more with it, so to speak, with our private money and leveraging with hard money. So really, we've built a rehab business based on volume.

What our goal was, was to be able to create a system and delegate to a project manager and property runners or multiple project managers, general contractors, to be able to do a minimum of three to five deals a month. We're really humming when we're doing eight to ten rehab flips every month. We've capped out, I think, one month late last year in 2012, we were doing, I think, 22 in a month was our highest. And there's a lot of moving parts. There's a lot of cats to herd, so to speak,

when you're doing 22 rehab deals simultaneously. So really what we found our sweet spot after months and months and years of doing this is right around 8 to 10 in the pipeline is great for us. So if we're buying anywhere from 3 to 5, we're constantly rehabbing 3 to 5, we're selling 3 to 5, If there's that constant flow, that's where our sweet spot is, so to speak. Now, as far as structure goes and what we've built to really help facilitate this seamlessly, the structure, if you will, is, you know, if you can picture kind of a mind map or a pyramid, so to speak, you know, Justin, myself are on top and directly under us is our primary project manager, you know,

for simplification purposes, let's just work with one project manager. And a lot of the, I'll get a question right out of the gates a lot of times is where do you find a good project manager? And that really goes to, you know, anything, any business. You want to make sure that it's the right personality, it's the right person. I personally have a strong set of beliefs that management, for a project manager, management skills are just as, if not more important than a construction or real estate background even. I would prefer construction background and real estate experience, but I personally pay closer attention to their people management skills or their personality skills. Because really what you're doing as a project manager is you're managing personalities. Yes, the knowledge of the construction is important.

Yes, knowledge of real estate is important. But really, that's all learned. That can be learned. So I can't stress enough, when you're looking for a project manager, it could be a real estate agent that wants to learn how to do fix and flip. It could be an intern from a local college that really wants to learn how to be an investor, and you train them to look at the rehab process. But in my opinion, someone that has great strong management skills, maybe even in retail management, somebody that's good with dealing with people. Because really your project manager is going to

see contractors, subcontractors, possible investors sometimes at really their highest and lowest points. When jobs are going great, everybody's happy. It's all cupcakes and rainbows. But, you know, if there's some things that go wrong, and trust me, in the rehab business they do, you know, that project manager has to really be able to herd those cats, you know, like I like to say, and be able to manage those difficult personalities in tough times. So, you know, I gave you a few ideas. Real estate agents, maybe retail managers, things of that nature. Look stronger at the people management skills. Once you find a project manager, and on that note, just to tell you a quick side note that's very relevant, we've gone through a couple project managers in our six, seven, eight years of flipping real estate full-time.

Right now, currently, our project manager is actually my brother. That came about just from various things that all lined up, and we're very fortunate to have him. He's a great fit, but he's a great people person he manages people very well but it it you know he happens to have a background in framing houses also in cabinetry finishing cabinets building cabinets but that was years ago the last four or five years more recently he was a a top level manager. So he's very good with people. And that kind of mixed experience is done very, very well within our real estate business. So with that said, your project manager is really at the top of your pyramid or the top of your mind map, so to speak. And right below him, I would recommend putting, we call maybe a field supervisor or a property

runner. And that's somebody that can, within an hour or two's notice, run over to a property, take some quick pictures, maybe videos sometimes, primarily just pictures. We've created a very easy one-page checklist that basically just itemizes what we want that property runner to see inside and out of a house. And we simply ask the property runner, our project manager asks the property runner to simply fill out the one-page checklist and take pictures of those actually according subjects.

And I'll get into that checklist in a little bit. But really what it is, is your project manager is above, then you have your field supervisor, your property runner right below. And then underneath the project manager as well, you really want to see if you're going to build a volume fix and flip business like we have, you want to have a minimum of at least one or two general contractors with their own set of subcontractors. We currently have a good three or four different general contractors, and they can each do about three rehab projects per contractor.

So if you can kind of still picture this pyramid of your project manager at top, and it's filtering down to three general contractors under him. And then under those general contractors is about three or four rehab projects. So simple math, which is good for me because I'm definitely not a math major, is if you've got three general contractors that can do three rehab projects at once, you can do nine simultaneous rehabs. So that's just very, very easy, simple math. And I'll try and get in a little bit more to personalities of the general contractors as well and what to look for and what not to look for. But the main purpose here, what I really want to talk about is the actual workflow and the actual systemizing of really the rehab management whole process from start

to finish, just to kind of outline how we do that business. A lot of times people ask, Justin and I, quick aside note here, a lot of people ask, how do you guys travel so much? How are you able to go back to the Bay Area or travel and see a football game up here or go visit family out in the East Coast or something like that? And honestly, it's because of this system that we've set up in our fix and flip business and other systems in our other branches of our business. But this is really like i mentioned

the passion of what i wanted to talk about uh the workflow itself so i won't get too bogged down in personality traits um that that can definitely come at a different uh podcast as far as talking about the types of people and personalities that we look for um so to really jump back into the structure and to not get too sidetracked i don't't know if you can tell that I have ADD yet or not. So we have our project manager and we have a property runner right below him that really is, you think of it as an assistant to the project manager. So you have your three general contractors that can each do three rehabs per contractor. So with that said, let's get into the process itself. Let's say a property comes across my desk. I green light it as far as it makes sense. It pencils for our rehab

model. We want to purchase it. We tell the seller that we're a green light. We're a go on the property. We'll get earnest money down to title and whatnot. Originally, what we'll do, we'll offer on properties with at least a three-day inspection period. However, our project manager and property runners, we've explained to them that within two to three hours of our call or email or text message, they've got to get down to the property and access it. So to really start from scratch and go down nine or 10 bullet points, when I green light a property for acquisition, we immediately reach out to our project manager with the address, some pertinent details about it. Obviously, if this

is a vacant property, we'll give them the lockbox code or access information. And the project manager, well, preferably the project manager will go down there to access the property. This is, again, before we've closed. We've given the green light to purchase it, but we're in a somewhat of an inspection period, if you will. A lot of times we'll buy property site unseen, but if we have an inspection period, we'll, we'll definitely get our own eyes on it when we can. So as soon as I green light, I'll send a text or an email. It's usually an email to our project manager and they'll shoot down there. Again, again, it's just address and lock project manager. And they'll shoot down there. Again, it's just address and lockbox code. So he'll get in there. He'll do his initial inspection.

He'll have a one-page checklist and fill that out if necessary. Take photos of the interior and the exterior. And again, that checklist is really, it's broken down in a few categories, kitchen, bathrooms, living area, yards. And really it's just kind of the checklist is mainly saying what's the general condition of the drywall, the flooring, the counters, the cabinets. You know, if they can get in there and if the project manager can get in there and write a few notes in the kitchen about, you know, cabinet boxes can be salvaged, we'll just refinish the fronts, then, you know, from our standpoint in a rehab budget, we know we can save a few thousand dollars if, you know, we know that we can save those cabinet boxes. So that's why putting your own eyes on it helps initially when possible.

So that's really what the checklist is, is things that I didn't see on just pictures from the MLS or pictures that the wholesaler or the seller sent me. Really having your own eyes on it helps. So that checklist will be filled out, pictures will be taken. And a lot of times a video, we ask for a three to five minute, we call it an initial walkthrough video. And we train our project manager to do a three to five minute video, you know, starting in the front yard, walk all the way through the house, show all the bedrooms, bathrooms, living area, kitchen, backyard, everything, and really walk through even some initial ideas for rehab,

if possible. And that comes with time as far as your project manager learning how you rehab houses and what you're looking for. But really, it's us getting that video in front of us like we were there ourselves. So our project managers, besides the checklist that we told you about in some photos, he does the video, three to five minute video, and then locks the house back up and leaves. Now, as he leaves, he uploads the pictures to a Dropbox folder that we have. And if any of you are not familiar with Dropbox, it's just a virtual cloud storage. It links to your smartphone or your iPad or whatever you use. So if you're taking pictures with your iPhone, for example, you just have a Dropbox app that you can upload the photos right to our shared Dropbox folder. He labels it, you know, 123 Main Street, initial pictures, so to speak.

And those will appear immediately in our Dropbox folder. With the video, we have a private YouTube channel. So he'll also, you know, if he's shooting a video on his iPhone, he'll immediately, when he leaves the property, upload that video to our private YouTube channel. Email us the link or notify that it's up on our YouTube channel. So if you can imagine, Justin and I are still in our offices, taking meetings, traveling at home, doing what we want to do. And virtually, or electronically, I should say, we have pictures and video popping up in our Dropbox and YouTube channel that we can access and look at. Now, if we see any surprises,

we can sometimes go back to the seller and say, look, in our inspection period, we found this, that, and the other. Sometimes a negotiating tool usually doesn't happen, but it really gives us a good idea for what we're going to need in terms of rehab budget is really what that initial walkthrough is meant for. So once that happens, there's no surprises. We fund, we record, now we own the home. We send the project manager back out to the home as soon as we fund and record. As soon as title sends us an email saying congratulations, it's funded and recorded. You're now the owners. Another email goes out to our property manager. They go to the property and they immediately,

uh, secure, we call it a lockout secure or a clean out secure. Uh, and they'll go down there and they'll do sometimes an initial trash out if it's light work. But mainly, it's meant to just change all the locks in the property as soon as we own the home. So the locks will then be changed and we'll hang our own combo lock box. And at that point, a lot of times what we like to line up is at that initial when our project manager goes down there after we've closed to change out the locks. If we can time it right, whatever general contractor is next in line for a job will meet our project manager down there at that lock change so they can actually start building a scope of work together.

Our project manager will walk the general contractor through the vision of what we're looking to rehab, knock out a few walls here, standard cabinets, standard paint, standard flooring. We use a lot of the same materials because we're, again, in a volume business. So a lot of times some of the color choices and finishings are already decided. It's more about if we're doing any sort of structural changes internally, knocking out walls here or there. Maybe we'll take a recently, actually we recently bought a house that was a three bedroom, one bath, but the garage itself was actually the third bedroom.

It was a permitted conversion to a bedroom, but it was not, although it was permitted, it wasn't done very well. And we bought it as a three-1 with no covered parking. And in this neighborhood, we love covered parking for our resale. So what we actually decided to do is we found some room in the back of the house. Without changing the actual exterior walls, we were able to reconvert the third bedroom into a two-car garage as it originally was. And we added a third bedroom on the back of the house. It was a storage room that we kind of reformatted into a bedroom, added another half bath, so we

actually turned it into a three-two with a two-car garage, immediately added value. But that was all done after we got our initial video, and when that video came through, talked about it with our project manager, gave him the ideas just on the video alone and they went down to change the locks. The project manager went down to change the locks and spoke with the general contractor about those ideas during the scope of work process. So again, it's kind of a step two when the locks are being changed. The ideal is to meet the general contractor, go over the scope of work, and really tell them what you want on that bid.

And our general contractors understand that we like to have our line item rehab bids back to us within 48 hours. And we understand that a lot of the general contractors, they need to get their particular subs in there, you know, electrical sub and plumbing and whatnot. So we understand it can't be, you know, a few hours turnaround. 48 hours is usually fair in our mind. So from that initial lock change and walk through with the general contractor to go over the scope of work, 48 hours later, we'll have a line item bid on our desk. In the meantime, our project manager is responsible for calling the utility companies, turning on power and water. And one step we added also is we have a signpost company that as soon as we close and our project manager

changes the locks and turns the power and water on. They also have the sign company called and they put the post right in front. And we've had similar to how real estate agents put their for sale signs out there with their picture and their phone number on it. We have a similar concept with our logo, our Phoenix Wealth Builders logo. And it says another neighborhood beautification by Phoenix Wealth Builders. And then it just has our website URL under our logo. And we've actually gotten quite a bit of buzz that way. People driving by our rehab projects, because a lot of times people want to know someone moving in, they're doing a rehab project. Who is it? And so, you know, with our neighborhood beautification sign

there with our website, a lot of people have gone, checked out our website, you know, signed in, gotten a free giveaway, emailed us, you know, really like what you're doing with our website. A lot of people have gone, checked out our website, signed in, gotten a free giveaway, emailed us, really like what you're doing with the house. We've gotten some positive feedback from it. So that is actually a little bit of a kind of marketing and branding step that we do in the rehab management process. So day one of demo, so to speak, our sign's already out there. Everybody knows who's doing the rehab. So power and water's on. Our Phoenix Wealth Builders neighborhood beautification sign is out front. We have our video there, our initial video, and we have our scope of work. 48 hours later, go by. We have our line item bid. Now, when that bid comes in to our project manager and ourselves from that general contractor, These contractors, we work with a lot

of the same three or four all the time. So they really know already, we know what the cost should be. They know that we know what the cost should be. There's really not too much wool being pulled over the eyes in our business these days because we've been doing it for a while and they're familiar with us and vice versa. So there's not a lot of tweaking and changing. We'll sometimes ask why this has changed from last time and why are these numbers different than this number, and we'll beat them up, so to speak, a little bit when applicable. But other than that, we'll green light a bid right away.

If it all makes sense, it's within budget. And then we sign a contract with our actual general contractor basically just lying out the rehab timeline and the draw structure, which I can touch on. That is definitely part of the process. So I do want to say that when we green light a bid, in our market with our general contractors and our rehabs, our typical rehab takes four weeks. So the way we've set up our rehabs is we do a very simple one page contract that says we approve X amount of dollars for the, let's pick a number out of the air. Let's say it's $30,000 rehab. Okay. So we'll give four weeks. The budget, approved budget is $30,000. Draw number one will be 50% of the rehab budget. So in this example, it'll be $15,000 for draw number one, and that's due on day one of

demo. A lot of people ask me why so much, why such a heavy draw up front. We've a couple different reasons, but without boring you with all the details, the major reasons are a lot of the ordering happens up front. The cabinets especially and sometimes the flooring, those have to be ordered early in the rehab process so they don't hold you up on the back end. And cabinets are one of the main ones that take the longest, depending on your market, your suppliers. It goes through ebbs and flows, on again the distributors the the manufacturers but cabinets and flooring are usually what takes the longest sometimes countertops but again we we do the larger draws up front so materials can be ordered and crews can start working so again draw one of 50% of the entire budget and do one day one of demo. The second draw will be 20%.

And that's due two weeks in, halfway point, depending on the progress. Now, I'm going to touch on how we know about progress. It obviously involves our project manager because they're constantly checking in on our rehab projects. But assuming that the progress is how we expect it to be, draw number two happens at the two-week mark or the halfway mark. And that again is 20%. It's actually, we flip-flop it. Sometimes it's 30%. And then the last and final draw is released only at final walkthrough approval. So, and I'll speak about that last process and what the final walkthrough looks like, but just to finish speaking about what our contract looks like with the general contractor,

three draw structure over a four-week period, 50% is the first draw. 30% is the second draw. 20% is the third draw. And then that's a final walkthrough and approval. So they understand from the beginning they have four weeks. The general contractor understands from the beginning they have four weeks. They know how much they're getting paid because we'll break down the percentage and what it equals in that draw structure. We'll give them the exact dates that the draws will hit their bank account. And they know that if it goes past the four-week mark, we charge $100 a day per diem. So every day that it goes past the contracted deadline, it's $100 a day taken off of that final draw until the rehab is complete. That's very typical in the rehab business. Some people play with a much larger per diem.

Some do less, but it is definitely incentive. A lot of times we'll not only incentivize by the stick, so to speak, but we'll incentivize with a carrot. And if they get done ahead of time, under that four-week mark, we'll also sometimes offer a bonus structure as well. So with that said, that's really what we do from after we get the line item bid, we approve it, we drop that quick one-page contract I just outlined for you, and they start demo. Now, as soon as demo starts and day one of rehab starts and that clock's

ticking, our project manager is responsible for taking a three to five minute rehab video update twice a week per property. So if one, two, three main street starts on a Monday, our project manager will go there probably on Tuesday or Wednesday, take a three to five minute progress report video, so to speak. And that'll probably at that point, two to three days in, we'll show demo being complete and really starting to get into the guts of the home at that point. Then he'll stop by again a few days later, maybe let's call it Saturday, Sunday, and show the progress that has been made. Again, those videos, keep in mind, as they're taken,

they get uploaded to our YouTube channel. So again, Justin and I can be anywhere, vacationing at home, at our office, kind of using our highest and best use of time, building a business, growing a business, taking meetings, networking, spending more time with family and friends, what really matters to you. And we're still plugged into our business because we have automated and systemized and delegated to key players in our business model. So we basically, let's say you have five houses going, five rehab projects going, or 10 rehab projects going, that project manager is stopping in twice a week on every single property. And I've noticed, quick side note, I've noticed eight to 10 properties per project manager is about what

you're capped at. Just on simple logistics alone, it's very difficult to be running all over the town and taking initial videos and pictures. And that's really why we've leveraged the project manager by using a property runner to kind of help out as an assistant, so to speak, and do those initial walkthroughs or those initial viewings and picture taking and checklist filling out because a project manager simply just can't be everywhere at once. But we have found in our market and the properties that we buy, eight to 10 properties for one project manager is about their limit. So again, to jump back into the system, that property is being checked in on at least twice a week with the videos and updates in, you know, in the emails that our project manager also is responsible to. We have a meeting once a week on Wednesday mornings. So on Wednesday mornings at 10 a.m., our project manager will sit in our company meeting

and we go through acquisitions. We go through rehab. We go through what's in our pipeline to sell. And we just kind of go round and round with all the departments in our rehab business. And so keep in mind here where we're not only getting two videos a week per property, but we also have our project manager sitting in the office for an hour or two on Wednesday mornings telling us all the nitty-gritty details of what's going on. And then also the project manager is required to, at the end of the week, Friday or Saturday, send a rehab. Basically, it's kind of a progress update on all the rehabs. So we'll get one long comprehensive email at the end of the work week, Friday or Saturday, with every single property. The address, the lockbox code, the most recent video link, the stage of rehab that it's in, the completion date, and if that's changed, and any pertinent notes. So in-person meeting, comprehensive email,

and two videos a week per property. And we haven't even, Justin and I, haven't even been to this house, so to speak, right? Our project manager and our property runner and our general contractors have handled it all so far. So that rehab, let's kind of dive back into our example. The four-week mark is up. Let's say it's on time. The general contractor says the rehab's complete. Our project manager schedules a final walkthrough with our listing agent. So the walkthrough happens with the project manager and the listing agent.

The reason we want the project manager there is obvious, right? They've managed the entire project from the beginning. They're the main contact or the main liaison between the general contractor and us. So the project manager is very intimate and involved with that rehab progress. So they'll be able to say, speak educatedly to the listing agent. Now the listing agent,

the reason we want them at the final walkthrough is that's who's responsible for selling that house, putting it on the market, bringing a buyer, selling it for top dollar, getting it unloaded and off our books sooner than later. So that's the reason we want the listing agent there because they look at it from a buyer's

perspective. So really what that process is really just a blue tape process. If there's any paint touch-ups, little minor things here or there, at the final walkthrough, it's supposed to be 100% complete by the general contractor and project manager's eye. So the only time in a perfect world that anything pops up, it's just minor things that can be done very, very quickly within a couple hours or so at most. We like to have the final clean done and everything by the time we have a walkthrough. So let's say everything goes well at the walkthrough, very few blue tape items. Our project manager and our listing agent will both send us an email or let us know that it's fully approved and good to activate on the MLS, or it's good to sell, so to speak. So at that point, what we'll do is we'll release the final and third rehab draw to the general contractor. So they're all done, they're paid, and we have them sign a lien waiver,

basically saying, you know, in exchange for this last rehab payment or draw, I'm waiving all my rights to file a contractor's lien or a mechanic's lien on this, basically acknowledging that they're paid in full. That's a key component that we didn't add until more recently, last year or so. So now the contractor's done, and you hopefully don't have to see the contractor back again, but that's kind of classroom world, so to speak.

In real world, there's a process. When a buyer comes and they're in escrow inspectors and appraisers come and more often than not there's little things that that an inspector will find that says no this has to be tweaked or fixed or patched up this way in order for the bank to fund the buyer's loan so sometimes you'll have to call that that general contractor back when your buyer's loan. So sometimes you'll have to call that general contractor back when your buyer's in escrow to fix a few of those inspection items. But other than that, for all intensive purposes, your general contractor's done at that point. So now what happens is the sales process, right? So when the project manager scheduled that walkthrough and that listing agent met him there and did that

walk immediately let's shift focus from the project manager to the listing agent as soon as that final walkthrough is done and approved the listing agent is now in charge of contacting the stager so they'll actually stage either lightly stage or fully stage our properties with furniture and finishings, wall hangings, artwork, sometimes a fake LCD or flat screen in a room, bathroom towels. Really just give it that stage, that lived-in feel. They also are responsible for the timing of scheduling the professional photographer. So now the photographer is supposed to come. We want to try and have the agent.

It's a juggling act with scheduling. So we get the stager there. As soon as the final walkthrough is done, the stager has got to get there as soon as possible. As soon as the stager is done, we want the professional photographer to come in, take the nice pictures and video for a virtual tour. Those pictures take a day or so to come

back. And once we get those professional photos back, then we can activate the MLS listing. So as soon as we go live with the new active listing, we have it staged with professional photos and it's listed active on the MLS. Now at that point, that's what the listing agent is basically commissioned with. To shift focus back to the project manager after that final walkthrough is done and they give us the green light to pay the final draw and they get the lien waiver, the project manager switches our signs out front and it goes from the, um, Phoenix wealth builders neighborhood beautification sign, uh, to the listing agent sign. So it's literally just a swap out of the sign out front. Uh, he then our project manager then cancels the utilities. Sometimes they actually keep the

utilities on for escrow. A lot of times, especially in summer, we want to keep the AC on for showings. Um, but those, those utilities usually get shut off, shut off at the end of the buyer's escrow. But that is a couple more tasks. Just like the project manager initiated utilities in the front end, they will also discontinue the services after a buyer closes. So at this point, we're all done. Contractor's paid and gone. We have our staging furniture in.

Our pictures are done. It's activated on the MLS. We get an offer. We negotiate. Let's say we accept an offer. We enter escrow with the buyer. Usually, typically, a 30 to 45-day escrow. We have our appliances usually not put in until the buyer's in escrow. Um, we have our appliances usually not put in until, uh, the buyers in escrow,

uh, that cuts down on, on if there's any ever theft, uh, it just, it gives, it gives people less of a reason to break in if you don't have nice stainless steel appliances in there. Um, so we usually, as part of our process that, uh, when the buyer's in escrow, we install the stainless steel appliance package in escrow. So now that's, you know, escrow's moving, the inspection's being done, the appraisals are being done. If there's any inspection items that pop up, the project manager will notify our general contractor that did the rehab. They'll do those little tweaks and fixes to make everything good to close. And then once that is funded, our buyer closes and records, that's when our project manager will shut off utilities and we're good to go.

So that's really the overall broad strokes kind of summarized version, kind of a snapshot from elevation, if you will, of our rehab management process and our workflow. And really, as you can see, it's heavily about automating, systemizing, and delegating. So Justin and I can be using our highest and best use of time doing what we need to do or want to do, growing and expanding our business. And we still are completely plugged in and dialed into our rehabs. We know exactly what's going on at all times. So if we've raised certain private money that wants to know, hey, how's the rehab going down at 123 Main Street that

you use some of my private funds on, we can immediately pull up the most recent video, send them a link, say it's looking good. Here's a video that was shot a couple days ago. Our team was just down there. It looks like we're on schedule to finish on time. You can always be plugged in in this kind of virtual electronic world that we're living in now with everything at your fingertips. We're able to stay plugged in wherever we are. And the reason I like this process so much, honestly, is I love what we do, the fix and flip of the house. It's a win-win for everybody involved. But what really gets me going, too, is that when we can do this numerous times over and over, and I'm not even going to the house.

I never step foot at a house that we buy, we rehab, we resell. I can tell you the vast majority of houses we've done this year, I don't even go down there. I usually only end up going to our properties if I want to, or if an investor's in town and wants to see some of our projects. I very rarely go to the properties ourselves now. And that's great. That's when you really know that you have built a business as opposed to just building a job, in my opinion. You own a business. You don't own a job when you don't have to be down there and hands-on, yet you're still 100% plugged in. So I know I've been talking for well over half an hour now.

I hope that some of you or all of you were able to pull out little pearls of wisdom here or there again Justin I appreciate you letting me uh flap my gums about rehab management you know it's a passion of mine so thank you and I know you want to kind of jump back on here and you know finish it up wrap it up and do a quick outro and tell them about our website so again everybody I appreciate you listening and I hope it was good for you. Thank you. Thank you, Eddie, so much. I really appreciate your time, guys. As you can see, he knows his stuff. He's created these systems over time and that is what's really taking our business to the next level, guys. So I can't tell you enough how much I appreciate you coming in here, dropping some wisdom on everybody and making sure that they get these golden nuggets,

or as you say, pearls of wisdom to take their business to the next level, guys. Again, you need to get to our website, thescienceofflipping.com. Go grab that free e-book that we're giving away, the 15 most costly mistakes a real estate investor can make. Happy to be here, guys. I was very happy to bring in my partner and brother, Eddie Rosefield. He knows his stuff.

He creates these systems, and he works day in and day out on our business so that we can go spend time with our friends and our family and create the lives that we want. So you guys are going to be hearing from him more and more as we do more and more of these podcasts. Again, guys, we're happy to be here. We're happy to provide this knowledge and we're looking forward to giving you another podcast here very, very soon. That is all here from the Science of Flipping. We're out of here. We'll talk to you soon. Peace.